SB140 Economic Nexus Bill Fails in House Revenue & Taxation Committee

Senator Jake Files's economic nexus bill, SB140, failed a do pass vote in the House Revenue & Taxation Committee today; the legislation's prospects are now unclear. SB140, which had passed the Senate, is an economic nexus bill modeled on South Dakota's. It would provide a $100,000 or 200-transaction threshold to trigger a sales/use tax collection obligation for an out-of-state seller. Senator Files submitted an amendment to the House committee today that would add a use tax reporting alternative to create a hybrid remote seller bill giving sellers exceeding the threshold a choice of Colorado-style information reporting or sales tax collection; this amendment was approved.

The question then turned to how to spend the expected tax windfall. Democrats proposed an amendment earmarking the new revenue for various purposes. This amendment was rejected. But then when it came time for the committee to vote, SB140 failed to carry with the Democrats withholding support and one or a few conservative Republicans voting against. Waiting in the wings was another proposal, HB1512, that would have dedicated the tax windfall to income tax reductions.

It is unclear whether SB140 will somehow be revived. Another potential vehicle for remote seller nexus is HB1388, a Colorado-style use tax reporting law that passed the House and has been referred to the Senate Revenue & Taxation Committee.

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